Homework 01

Welcome to Economics!

The questions have the following point values.

Question	Points
1	15
2	10
3	15
4	15
5	10
6	15
7	10
8	10
Total	100

Question 1

What is the approximate dollar cost of the tuition and other fees associated with the economics course you are taking? Does this dollar cost fully reflect the opportunity cost to you of taking the course?

Question 2

Answer the following questions about information.

1. How does having information affect choices that consumers make?
2. What is imperfect information?

Question 3

Residents of the town Smithfield like to consume pizzas, but each pizza requires 10 people to produce it and takes a month. If the town has a total of 100 people, what is the maximum amount of pizza the residents can consume in a year?

Question 4

A computer programmer works for $200 per hour. She likes to eat vegetables, but isn't good at growing them. Why does it make economic sense for het to spent her time programming and shopping for vegetables?

Question 5

Why would division of labor without trade not work?

Question 6

Consider the case of clean air. About 2,000 years, clean air wasn't a scarce good, but now it is (in the sense that society has implemented pollution regulations). Thus, agents that need to pollute (for example, power plants) have to compete with agents that need clean air (for example, people).

1. What is scarcity?
2. What caused clean air to become scarce over time?
3. Can things not be considered scare today, but be scarce tomorrow?

Question 7

Why is it unfair (or meaningless) to criticize a theory or model as unrealistic?

Question 8

Suppose you are asked to analyze an issue unlike anything you've ever done before and that you don't have a suitable model at hand for analyzing the issue. How would you proceed? (How would an engineer proceed in a similar situation?)